This is the third post in our series on law firm marketing budgets. Check out our other posts in the series, discussing aligning your goals and plans into a budget focused on innovation and learning everything you can about your marketing budget and expenses.

 

The best marketing https://www.legalisi.com/create-winning-marketing-budgets-budgeting-for-innovation/plans call for new and innovative ideas to break out of the clutter and drive growth. This is absolutely necessary and the most important part of the budget process.   

But let’s be honest – there will always be a list of marketing expenses that recur every year. Some for good reason – they have a great return on investment (ROI) and need to only be tweaked for the coming year. And some for reasons that are beyond your control. (You know which ones I’m talking about.)  

Recurring expenses are not the exciting and sexy part of the marketing budget. But they are an important component that needs to be reviewed and understood. Recurring marketing expenses do not need to break your budget. With careful planning, they can actually free up space in your budget.  

By taking the time to review and analyze marketing expenses during the planning phase, you can more accurately forecast the expenses in the coming year, and make room for the initiatives that will drive the most growth for your law firm. 

What goes up… [Marketing expenses that increase]   

Look at your recurring expenses from previous years. Ask yourself:   

• What upward trends do I see in expenses?   
• Are there areas that are consistently increasing?   
• Does inflation play a factor?  
• Are there any legal or regulatory changes on the horizon that will increase expenses? 
• Have I been notified of any cost increases or changes to how expenses will be billed?  
• Are there marketing initiatives that have a great ROI that I should double down on? 

And look at the firm’s goals for the year. Ask yourself:   

• Will there be an increase in attorneys in the coming year?   
• Does the firm plan to add additional offices in the coming year?   
• Is the firm focusing on a practice area, industry, or geography that may drive an expense increase?   
• Will the firm’s expected growth cause any of the recurring expenses to rise?   
• Will I need to add additional marketing personnel?  

If you identify an area that is expected to increase, determine the anticipated cost and add that more accurate number to the budget. Adding a blanket 3% or 5% increase per line item – when you can anticipate expenses more accurately than that – will just lead to frustration down the road.   

… must come down [Efficiency and cost cutting]   

You have great new marketing initiatives you want to implement in the coming year. Your practices are growing, your firm is expanding, and you are breaking into new markets. Great. Everything is working out perfectly.   

The downside to growth is additional costs, and firms do not always expand marketing budgets in-line with firm growth.  

Look at your recurring expenses from previous years. Ask yourself:   

• What downward trends do I see in expenses?   
• Are there areas that are consistently decreasing?   
• Have I been notified of any cost decreases or changes to how expenses will be billed? (Hey, it could happen!)   
• Are there marketing initiatives that are underperforming and should be eliminated?   
• Are there marketing budget items that are no longer necessary and can be eliminated?  
• Are there processes that can be optimized to save time or money, or to bring an outsourced function in house? Conversely, would it be more efficient to outsource specific marketing initiatives or purchase software to work more efficiently? 

And look at the firm’s goals for the year. Ask yourself:  

• Do I expect there to be a decrease in attorneys in the coming year, especially in a particular practice area or industry?   
• Does the firm plan to close offices in the coming year?   
• Is the firm eliminating a practice area or industry that may drive an expense decrease?  

Cutting expenses is not easy. But it is the secret to creating a budget with room for new initiatives. As we have seen time and again, firms are able to streamline their processes and cut expenses when pushed by the economy or other external factors. Spend some time applying that same thinking during your budget process and see what expenses you may be able to reduce or eliminate.   

Understand your current marketing expense situation   

One final note on this topic: It is imperative that you thoroughly review your previous years’ budgets and expenses. Know them inside and out. Understand where there are increases and why. Understand what is performing well and why. Understand what is performing poorly and why. Look for trends.  

When presenting your budget, be prepared to explain why certain areas are increasing year-over-year – or why you want to eliminate something. Be able to defend both your increases and decreases.    

The nice thing about recurring expenses is that you have years of data to examine. You know where to look and who to ask about anticipated expenses for the coming year. Use this to your advantage. Being able to accurately forecast recurring expenses gives you the flexibility you want – and need – to add new marketing initiatives for the coming year. 

Let’s get started. Contact LISI today to learn more about how we help law firm clients create marketing budgets that get results.